Nanoform Finland Oyj

OMXH:NANOFH

Earnings Call Transcript 2022-Q4

[Henri Von Haartman, executive]

Good afternoon all, and a warm welcome to Nanoform's Fourth Quarter and Full Year 2022 Report Presentation. My name is Henri von Haartman, I'm your Director of Investor Relations. And today, our CEO, Edward Haeggstrom; CFO, Albert Haeggstrom; and Chief Commercial Officer, Christian Jones, will present to you.This presentation is webcasted through Financial Hearings, and there's also the possibility to call in and listen by phone. The presentation slides are shown here throughout the webcast and they can also be found on our web page under the Investors section. Now, after the presentation, we will hold a Q&A and it's possible to ask questions by calling in.Today, we will start with a short introduction to Nanoform, then CEO review, then commercial aspects and then financial aspects. Operator -- well, actually, we can move the slides ourselves. So I will move to Slide #3.And with these words, our CEO, Edward Haeggstrom, please go ahead.

[Edward Haeggstrom, executive]

Thank you, Henri, and welcome also on my behalf. Next slide, please. Nanoform is a technology platform company residing in Helsinki, approximately 150 employees, does GMP manufacturing, has 2 different technologies, and we're going to talk about both, listed on Nasdaq First North Premier, both in Helsinki and in Stockholm.Next slide, please. We're addressing a very big problem in a very big industry. Here, you can see that a lot of money is being spent and even though not enough medicines are coming out. We can see that '22 was a less good year than the years before.Next slide, please. We are addressing the main reason for why there are so few new medicines on the market, poor bioavailability. It means that a potent API is not taken up by the body. API stands for Active Pharmaceutical Ingredient, the parts in the medicine that actually makes you feel better.Next, please. This we do by nanoforming, which means that we're taking coarse powder owned by our clients, and we make it fine. The reason is then we improve the bioavailability by increasing the specific surface area.Next, please. The process we use is patented. It's a green process. It's called Controlled Expansion of Supercritical Solutions, CESS. Here, you can see an outline for how it looks.Next, please. When we nanoform, a lot of good stuff happens in a cascade. We increase the bioavailability, new drugs can come to market, we can reduce the dose and potentially reduce the side effects. This means that our clients can have a patent prolongation and a widening on the patent protection. It also means that as more of the drug is taken up by the body, less needs to be produced, manufactured and shipped. This, of course, means that the bioburden also both in the local environment and globally can go down.Next, please. On the small molecules that we spoke about before, we address the bioavailability. On the large molecules where we can also add value, there are many things we can do. But here, I would like to underscore too, that our clients and partners recently have been very interested to enhance the drug loading keep capacity in formulations and to tailor release profiles. The first means basically that the pill contains more drug or the bolus contains things -- more drug or the implant contains more drug. The second one means that the drug release is different. For instance, it happens during a longer time.Next slide, please. Here, we present schematics of the biologics process. Basically, we have a nebulization step, we have a complicated evaporation step where we basically control how the nebulized mist is dried. We have an ionization step, and then we have a collection step. This is also a process that we have filed for patent protection and right now, we are pending in United States, otherwise, we are in [ PCTNs ].Next, please. When it comes to where are the profit pools for Nanoform, there are basically 3: to give unsuccessful drug candidates second chance; to improve existing drugs; and to enable new drugs.Next, please. Here is a slide that basically shows what we're doing. So we work with global large pharma with midsize and specialty pharma and with biotech. We take in bulk API, and we have a format to make it into [ front ] target. Basically, we always get paid. There is either a fixed fee for a project or we get paid for making a certain amount of material or we get paid as royalty based on how much we provide for [ P4 ], that is under market.Next slide, please. Now I come into the CEO review. The CEO review will really be about holding the course in an environment that has a lot of impactors: COVID, Ukraine war, change in the [ cost per month ]. I will show you that while there has been a reduction in our momentum in H2, towards the end of the year, we have been able to get that momentum back. This means that I will be confident in giving you guidance for 2023.Let's move on, please. First of all, I'm happy to announce Antonio da Silva as our new Chief of Business Operations. Here, you can see that I have underscored in green the fact that we and the organization now have more than 100 years -- sorry, 100 accumulated pharma product launches. The reason why I underscore this is that as we have matured, this part of our organization has become increasingly important.Next slide, please. During the last few years, we have done a lot of stuff. But it can be summarized by saying we have put the machine in place. We have put the processes in place and now it's time to start to use it for the benefit of our patients and our clients.Next slide, please. Here, you can see a picture of a unique asset. This is GMP2. It's automated, it can make smaller nanoparticles than anybody else. It can work on 30 nanograms per meter cube. And this here is what we work on. We have 3 GMP assets: GMP1, 2 and 3.Next slide, please. Here you can see our business targets for 2022. We were able to fulfill #1 and #2. We fell slightly short on #3 and #4.Next, please. Based on the idea that we have been able to revert the momentum on the intake of the GMP project, I'm happy to pronounce the ones for '23: an increased number of non-GMP and GMP projects signed in 2023 versus 2022; also an improved operating free cash flow in 2023 versus 2022. These 2 things are necessary in order to put us on a solid trajectory towards cash flow positivity in [ 2025 ].Next slide, please. Here, you can see our 2025 targets. I think all of them are still valid. I think we are maybe a little bit on the lower side in the employee, we're a little bit on the lower side in the lines. And the reason is that we have been able to squeeze out more productivity from our engine already now. On the gross margin, I see no reason why we can't fulfill that and also on the number of APIs and projects per year. Last year, we showed for the first time that we could handle 5 projects on one line in a year, and this means that we are solidly on track for that. The final or fifth balloon, the cash flow positivity I already mentioned, and this requires both that we keep our costs flat and that we grow our top line. We will talk more about that today.Next slide, please. With this, I hand over to Christian. Christian?

[Christian Jones, executive]

Thank you, Edward, and welcome to the commercial presentation from Nanoform today.If we can move to the next slide. So as you can see, the global drug R&D pipeline is only going in one direction. And the latest stats from 2023 estimate that there are 21,000 drugs in development. Despite the macroeconomic environment that we are in, this trend is only increasing.If we look at the next slide, we can see that there is also a significant increase in the number of companies that are working to develop these molecules. And of course, it's a challenging time for many of the smaller biotech companies, but there is still a huge demand to develop new drugs, and we only see that again going in one direction.If we look at the revenue drivers and the industry attrition rates, it's quite interesting. We have a major pharma productivity issue. As Edward alluded to earlier, we're spending a huge proportion of investment in the pharma industry. And that's typically not coming back in terms of the output that we're seeing. So basically, this slide says 2 things. It says that to develop a new drug, it takes 9 to 13 years and to develop an existing drug, to make it into an improved product, for example, like 505(b)(2) pathway, it takes approximately 3 to 6 years. Our customer portfolio is a mixed mixture of both the innovator, the large pharma and the small biotech for developing NCEs and also those companies in the specialty pharma space or those big pharma companies that are interested in doing life cycle extension or looking at a 505(b)(2) pathway. And ultimately, we derive value out of every part of our relationship with our partners through every stage of their journey, and we are paid for all of our activities.If we move to the next slide. I think this slide is our -- this is our business model, but I'd like to just sort of talk you through this and to reemphasize something. Our business model has stood the test of time. We initiated this business model in 2019. When I joined the business then, we talked about what's the appropriate model for growth of Nanoform. And this model is still relevant and still appropriate for our business going forward. We get paid to evaluate the compound that come in from our partners to see whether our technology can add value, whether we can make nanoparticles and how they could be -- prove value in biology, and we get paid to do that. And then we take the molecule through into clinical manufacture. And again, we get paid to deliver material to clinical specification for our partners' projects. And then drugs on the market. We don't yet have a drug on the market, but we hope to be there soon. And when we are there, we will be paid for commercial supply of that product and also a royalty on the net sales. And that royalty will depend on the value that our technology contributes anywhere between a 1% to 20% range. And so throughout all these steps in PoC or non-GMP, we charge our clients anywhere between EUR50,000 to EUR500,000, [ depending upon ] the scope of the project. And then in the Phase I to III trials, anywhere between EUR0.5 million to EUR10 million for supply of clinical material.Okay. Let's move to the next slide. This is an image representing the commercial team. And I would say, small but powerful but, in fact, it's growing ever larger. We now have 11 of us in the team, and we spent a good proportion of last year investing in our people and expanding our team. So we expanded that by 40%. In order to get the results that we want to get, we have to have the right people in place and the right processes in place. And as you can see from this slide, we have people that are very experienced, both in United States and in Europe, that represent the Nanoform business. We also have experienced BD professionals that are out networking, trying to build relationships with the customers. And we're building a lead generation team with an insight-driven intelligence angle to understand where we should be, which doors we should be knocking on, with which pharma companies to have which types of conversations, and who should we be talking to behind those doors. And so that's a very powerful business intelligence angle that we bring to our commercial activities.And as we move to the next slide, I'd like to highlight the commercial milestones from 2022. I think the first one would be the relationship with AstraZeneca. We mentioned in our financial reports last year that they had concluded a positive technology assessment through a very thorough and diligent assessment of our CESS technology and that they had moved forward into identification and implementation stage for clinical assets to use with our technology. So a very positive announcement after a very thorough review from AZ.Secondly, I think another sign of our business maturity and our commercial relationships maturing was the collaboration on the blockbuster product. We signed commercial terms and we have the project now in GMP manufacture, and that's planned to go into clinic later this year.TargTex, our Portuguese biotech partner, we have positive in vivo data for GBM for Glioblastoma Multiforme. This was a major announcement last year and something we were very proud to be part of and to be able to provide hope for patients with this horrendous disease. Our technology can add value in all sorts of different ways to products. Sometimes it's just about making something more convenient, taking a few pills and making it into a single pill. And that can be beneficial to patients. But sometimes it's truly transformational, and that's in a project like TargTex where potentially it could be life extending or even lifesaving.We talked about the commercial team expansion. We have been optimizing our back office and front office activities to make sure that what we do behind the scenes, we're ready to onboard a large volume of the customer projects in the most effective way. And at the same time, in terms of the front office, we're able to bring in that large volume of projects and make sure that we bring the right ones in for the business. So last year saw 18 new projects and 12 new customers. And I think this in itself is an interesting statistic that should be discussed. It's not 12 new customers with 12 single projects. It's a mixture. Some brought in single projects, some of those projects came from repeat clients. And some of those projects came on board with 1 client bringing more than 1 molecule.And I think this is very interesting because the repeat business is a real indicator of the value that partners see in our technology. And we're having quite a few companies now wanting to either extend the scope of their project or to bring on board another molecule. And that can only be testimony to the relationships that we're building with those parties. The other aspect is people have really seen the value in the technology and bringing on more than 1 molecule with Nanoform. So I think on both counts, very, very promising. Our customer satisfaction levels increased last year. We've been monitoring them over the last 3 years, and they've been increasing year-on-year. We're very pleased to see that, and we only wanted to go -- keep going in that direction. We place a lot of value in the relationships that we build with our partners because ultimately, we see ourselves as an extension of their team. And importantly, last year also saw our first customer referral where one of our partners actually referred our technology to another customer where they saw that the technology could add value. Towards the end of last year, we saw a new quarterly record in customer meetings and proposals sent. And I'll talk more about that on the next slides.So as you can see here, we have a number of projects and the target this year is to sign more projects than we signed last year. If you look to the left, annually and cumulatively, you can see the growth in the number of non-GMP projects. And between 2021 and 2022, we had a similar number. Of course, we would have liked to have delivered more projects and signed more projects last year but due to a number of factors, I think the markets, environments, the macroeconomic effects, we didn't sign as many as we would have liked to. But we were very, very active from a commercial perspective and very engaged. And I think we will see the fruit of that activity and that labor coming into force in this year. So if we look at the right-hand graph, you can see that we landed 8 projects in Q1, 5 in Q2 and then 2 and 2 in Q3 and Q4. And yes, we're disappointed with that result.But, let's go to the next slide because I think this tells a different story. The number of active opportunities has been steadily increasing. But I'd like to cast your eye across to the right-hand graph, where you see the number of proposals that were sent per quarter. From Q1 to Q2 and Q3, it's quite flat, but then it almost doubles and picks up, up to 23 proposals issued in Q4. And I think this is a function of the change in sentiments in the markets towards the end of last year compared to earlier in the year. It's also a function of a lot of our large pharma companies freeing up their travel restrictions and attending conferences. And I think the last quarter of the year is always a busy period, but in particular, last year with conferences in the U.S. and in Europe, we saw huge engagement from major pharma at these events and also from the general biotech and midsized pharma community. So we look positively towards 2023 with the level of momentum that we have built up. And as with all these things, there is always a lag in the time of activity, proposals going out to be seeing orders being signed.So if we move to the next slide. I put this slide in really to provide a visual on how fast are we? Are we fast enough from a commercial perspective? And when we started off, we were really trying to sell Nanoform as a company, trying to raise the flag so people would understand who we are within the marketplace and have some level of credibility. Well, we're not there anymore. We've -- certainly, people are aware of who we are. And I think we've seen an interesting change in the dynamic of our customers where we had those first-to-adopt companies from an innovation perspective, the likes of AstraZeneca, that came on board early in our growth. We had companies that followed, who were sort of first-to-follow, the likes of Boehringer Ingelheim and others that we've mentioned in the sort of preceding time. And now I think we're getting perhaps -- establishing relationships with some of the more conservative major pharma organizations.So this is an interesting aspect. But what we can see here is that from last year to this year, there's really not been much change in the amount of time it takes from lead to contract execution. And I think we're getting to an optimum here. Could it be better? Possibly. But I think we're building up a large sales pipeline to be able to bring in many, many opportunities. And we're putting the right resources in the right places. You'll notice that there are some outliers here, the likes over 500 days recently. And ultimately, that's -- most of those large numbers have come from large pharma companies, not all of them, but most of them. And as I said, sometimes we have to bang the door many times before we eventually get our partners to sign. The smaller numbers can come from 2 different things, either a small biotech or a major pharma that has an absolute burning platform -- the burning need that needs to be solved or as we're starting to see, repeat customers. So where we've gone into the relationship, it's taken time to put in place the contracts, but once the contracts are in place, repeat business is fairly straightforward to implement.I'll move to the next slide. This is really a snapshot of our customer relationships to date. So we've engaged with 7 major pharma companies. We have 24 midsized specialty pharma and biotech companies, including the likes of Pharmanovia, a [indiscernible] company, Herantis a company based in Finland and TargTex, our Portuguese biotech partner. We've got 3 collaborations ongoing. Aprecia and Celanese are 2, both based in the U.S., and we have 1 co-development. This is on the blockbuster drug. Last year, we saw 12 new clients and 2 new in Q4 2022.I'd like to finish on Small is Green. The environmental impact of pharmaceutical manufacturing can be considered the same as the output of a small country. And the pharma industry is heavily pressured to improve its ESG rating to invest in technologies and manufacturing footprint that can improve their green rating. And as such, major pharma, particularly 80% to 90% of their carbon footprint comes from their supply chain. It comes from the APIs that are manufactured in the drug products and the logistics. And there is a big trend towards onshoring of manufacturing as well from the East back to the West. And our technology actually plays very well into this space. Both the technologies, both small molecule and large are green. They're free of organic solvents. The CESS process utilizes a clinical-grade recycled carbon dioxide. It's actually produced as a side product from road salt production. So it has a really big green stamp in that regard.We also operate STARMAP, which is the digital twin of our CESS process, and this eliminates time and unwanted experiments for our partners. We can quickly pick the winners to improve the return on investment for them and the green angle in terms of the experimentation that the service saved.We ultimately aim to reduce global waste at the point of administration by developing patient-centric formulations and medicines. And that means that by having a better bioavailability, we can reduce those drugs that are going to be excreted to the environment.By enhancing bioavailability, we also see a big impact in opportunity to reduce dose, to reduce production volumes, logistics, carbon footprint of manufacture and support the rise of onshoring in pharmaceutical production.Our goal is to add value for patients, and that's why we believe that small is powerful, both for patients and for the planet. And thank you for your time. Albert, over to you.

[Albert Haeggstrom, executive]

Thank you, Christian. Let's go over to the financials. If we start to the left, we ended the year with 150 employees, we added 25 during the year. In 2023, we do not expect to add to our headcount as we focus on productivity, efficiency, automation and cash flow. The same goes with number of lines. As Edward mentioned, we did already 5 customer projects on 1 non-GMP. That means that as we today have roughly 20 lines, we can focus on doing more projects per line rather than building new lines. So also here, we focus on cash flow and productivity and efficiency.When we look at the number of projects generating revenue, last year, we had 35 projects, the year before we had 22. And then on the right-hand side, if you see revenue-generating projects per quarter, you can see that we reached a plateau of roughly 23 per quarter that were generating revenues. If we then look at the booked revenues, left-hand side, the rolling 12 months figure went to EUR3.5 million, up from EUR2 million last year. And we had a new high of quarterly revenue of almost EUR1 million.A few points on the Q4. The fourth quarter had a bigger amount of material and services costs above the gross margin because we ramped up the GMP for the coming GMP delivery in -- that is planned for Q2. And that, of course, had a small impact on the gross margin. That was 82%, if you -- that you can see from this slide. In the fourth quarter, our annual number was 90%. We see this as temporary. So we believe that in '23, we will go back to sort of normal levels. We have now also, of course, the tank -- cubic meter tank that has been hooked up to older ones.If you look at the IT expenses, as you know, we implemented SAP during 2022. We went live on schedule and basically on budget, the beginning of January. We are very happy with that. Implementing SAP is always a big project. But here, you can also see that the most expensive cost and work is done prior to the launch. And therefore, in [ '23 ], the IT costs will come down significantly from last year.Here are 2 numbers: on the left-hand side, total number of employees; on the right-hand side, number of projects per line per year. They are both going in the right direction. So we want to add automation. That means that having less people per line, doing it more automatically, also keeping the personnel costs in line. And on the right-hand side, we want to increase the number of projects per line. So as we said before, we are targeting 5 projects per line per year. And what we have learned during 2022 is very important: 3 things. First of all, we have done it on 1 of the lines on non-GMP side. That means that we know it can be done for the whole fleet probably. And then secondly, we have learned on the biologics side that most likely we will be able to do even more projects per line per year on the biologics side. And that means, all in all, we will probably not be needing to build as many lines as previously thought and still being able to do all the projects we plan.If you then finally go to the operating free cash flow. And here, we have the target to have an improved operating free cash flow in '23 versus '22. Here, you can see that we have invested heavily during the last years. And in 2023, we expect to see a clear trend shift here. So we expect all the factors impacting the cash flow positiveness or the operating free cash flow to start to work in our favor. The fact that despite some increases in average salaries instead of paying some small sums to the [ ECB ] for keeping them, we instead get a return on the capital in the form of interest and now the interest is going up.That was the last line I thought of talking about, so I think we can go now to Q&A.

[Operator]

[Operator Instructions] There are no more questions from the telephone conference at this time. So I hand the conference back to the speakers for any closing comments. [Operator Instructions].

[Christian Glennie, analyst]

This is Christian Glennie from Stifel. I think we got a slightly odd automated process here. Okay, kicking off then with the -- I guess, the focus potentially for this year on the GMP program, the blockbuster GMP program, you talked about delivering this year. Just worth a reminder in terms of what you are able to say about that product in terms of therapeutic area, what the objective is of the Nanoform formulation in terms of, is it a different mechanism -- a different route of delivery? And in time, will we actually be able to know who the partners are and what the product is?

[Edward Haeggstrom, executive]

So if I take the question first, and then I will need to have a little bit help from Albert in order to know where the boundaries are, what I can say. I'll start from the end of your question. Yes, you will be able to know a lot immediately when we can say so. You will also be able to track the progress via the official databases that we, of course, will be visible in. When it comes to the size, the blockbuster is the size and it's one of the big indications. I don't remember exactly what we're allowed to say on the assets. So maybe Albert can help on that. Then when it comes to the time, I think we're softly aware, saying that Q2 is when we expect that we will be shipping material for this program. And then I also think we have been saying that we have applied for upgrading the site to a multi-API side, which, of course, will be necessary for this. And we don't foresee any problems with that either. But maybe, Albert, if you can help me with the other parts of the question, please.

[Albert Haeggstrom, executive]

No. I mean, we haven't said the indication, but we have said that it's a blockbuster above EUR1 billion a year. And as you know, we started with 1 partner and then the consortium grew into 3 partners. And now we say that we plan to start order ship in the second quarter. And we have also said that -- originally, we said that the deal was a 7-figure deal -- a low 7-figure deal. Here, we have also said that when it comes to the financials, we have entered a deal where we have equal shares, meaning that Nanoform can expect a 25% share of the net income received by the parties.

[Christian Glennie, analyst]

Okay. That's helpful. So if I can -- maybe a quick follow-up on that then. Is it -- maybe we'll have to wait, but is it possible to say yet whether that trial, assuming it sort of starts in the second half of the year, is that likely to be sort of 1 trial? Or is there likely to be a step process one followed by another?

[Edward Haeggstrom, executive]

I think that's a very good question. And to the best of my understanding, there will be 1 trial first, and then I would presume that there may be another trial after that. I speak a little bit softly on that because I don't have full insight into that topic.

[Christian Jones, executive]

I think -- it's Christian here. I don't think we provide guidance on that, Christian.

[Christian Glennie, analyst]

Yes. No, that's fine. I understand. And then on -- maybe for Christian then, in terms of the -- obviously, the uptick in proposals, maybe just give a sense for how you're sitting at this point in time as you look to deliver those contracts this year? How many live proposals are out there today? And what is your typical conversion ratio over that kind of -- and you've said it's sort of 4 to 5 months, so what's the conversion ratio?

[Christian Jones, executive]

Okay. So I don't think we can provide information about our Q1 status when we're talking about our Q4 report. But what I can say is that typically, our conversion rate is higher than the industry standard in the CDMO space. I think typically, you would expect for the new business with the new partners to be in the 20% to 25% range for winning contracts. Some of the better companies, probably slightly higher. But with Nanoform, we're typically in the 25% to 30% range with new clients. So we're trending above the industry average. And I think when it's repeat business with existing clients, we also have an even better score than that. So I think they're good -- [ certainly ] good numbers. And the whole focus now is to broaden and deepen the sales -- the size of the pipeline, so that we can bring in more leads in order to get to our position that we need to be by the end of the year.

[Christian Glennie, analyst]

Okay. And then finally, if I can. Just, yes, any further updates or what we should be expecting on the biologics side as it relates to potential GMP, the actual process for getting formal approval for a GMP line and any biologics GMP work that might be possible in 2023?

[Edward Haeggstrom, executive]

Thanks. That's a great question. And I'll try to answer the different parts of it. First, if we start, I think that the biologics part has picked up now. It's clear that people have warmed to the thought that small is powerful also in biologics. And we look forward to being able to give you names as soon as our clients and partners allow us to do so. I mentioned that there are now being a focusing on the questions that come in according to the 2 balloons. And then maybe thirdly, I think it's important to say that the GMP pilot that we have built, it's basically aligned and that can be converted for full-scale biologics GMP. It will need a clean room around it. We have already shown that we can do those, and it will need a GMP QM as well, we have one in place already. And then it will need [ steps ] from Fimea and we have shown already that we are able to also get those. So I think that immediately when we see that the business needed is there, we will be able to fairly fast convert it into a full-fledged GMP1.

[Operator]

[Operator Instructions] The next question comes from Lars Hevreng from Danske Bank.

[Lars Hevreng, analyst]

On the ongoing capacity expansion, you mentioned the GMP line #3, due for completion around the next quarter. What can you say about the planning for GMP line #4 and onwards?

[Edward Haeggstrom, executive]

Yes. So GMP2 and 3 will, of course, be part of this inspection that I talked about a little bit earlier. GMP4, we have decided that we want to fill up the capacity on GMP1, 2 and 3 before we move into advancing GMP #4. The idea of GMP #4 will be similar to the ones we have, which means that we will incorporate the new things we have learned, and then we will try to make an incremental when it comes to all other things. So the idea is to have as few changes as we can and then incorporate the learnings we have in the sort of process stability on GMV #4. First, we lock number -- GMP1 and [ to enter ].

[Albert Haeggstrom, executive]

And also one comment is that remember that on the GMP on the biologics side, the line is much smaller. It takes up a few square meters, and it can be faster built on the CESS side. So if you think of it, it took roughly 18 months for the -- on the CESS side to build the lines. Now we know better, we can copy paste. So we could be faster of going -- potentially being able to do it in 1 year. And on the biologics side, it can be even faster because the lines are much smaller than on the CESS side.

[Lars Hevreng, analyst]

Okay. And the status on your plans regarding establishing a site in the U.S. What's the status there again?

[Edward Haeggstrom, executive]

Okay. I'm happy to talk about that. So together with Goncalo, we have been working tightly with Collier. And on their recommendation, we have not narrowed down the number of states in the game. So we are at 4 states that we fit against each other. As I have said before, we have already spoken to one of the governors and now we're lining up to speak to the second one. On the tactical level, we have identified in each of these states, sites and buildings that are potentially okay to us. The idea at least that we will take a solution from [indiscernible], copy paste it and then have it slid in, plug and play, into the American scaffold/infrastructure. That means that we can have something that we know will work. When it then comes to timing, it's clear that we want to synchronize the build and the demand of the business in America with the investment profile there. And right now, we are looking at hopefully in getting the market to cool down a little bit when it comes to the leases. Albert can talk to you a little bit about the money if he wants. And from my perspective, we continue to prepare and when the timing is right, we strike by doing this plug and play, we are able to still hold on to our December '25 GMP particles in America target. Albert, do you want to say something else?

[Albert Haeggstrom, executive]

Yes. I think when you look at the statistics, there are, for example, one of the biggest markets there. The expectancy is that if all the projects that are planned come online, you will have 50% more space available in the coming 2 years. And what we have also seen is that the market pricing has not yet reacted. We are also seeing that some companies are trying to get rid of their leased space. So the momentum, because of the fast increases in the interest rates during the last year, is clearly down. And that means that when we -- if we want to sign a 10-year lease for a facility in the U.S., we are not in a hurry to do it from a price point of view. So we want to make sure that the market prices have reacted to the new normal and are not still on the sort of 0 interest rate levels. But also, we want to find the right place. But it's clear that there is lots of available capacity that is increasing in the coming quarters. So we want to be a little bit opportunistic also. But of course, we are doing a thorough planning, and we have already quite a few potential targets, but we are still a little bit cautious on the cost level.

[Lars Hevreng, analyst]

Okay. And regarding the -- coming back to the collaboration with TargTex, are there any milestones involved in that collaboration, milestones for you in terms of reaching new stages of development or anything similar?

[Edward Haeggstrom, executive]

So the answer is that -- again, I will need a little bit help on exactly where the boundaries go. But we have basically very clearly that we will need to manufacture certain amount of GMP material for them. My best understanding is that this will happen rather towards the end of '23, '24. And we know that we will be able to do so. I also think that it's fair to say that they have reached out to get preliminary [ order ] guidance from the big American agency. And this is, to me, also an important step. It means that Nanoform will now show up on their radar. Anything, Albert or Christian wants to add to these?

[Christian Jones, executive]

No, I think you highlighted the relevant points, Edward.

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Henri Von Haartman, executive]

Thank you, operator. On behalf of Nanoform, I would like to thank you all for participating today, and thank you for the questions. If somebody has more questions, you're always welcome to contact us later. You will find our details on the web. And hereby, we wish everybody a great Tuesday afternoon and evening, and you will all have the possibility to see us in the near future on the various conferences that we are showing on the slide here. Thank you for today, and goodbye.